Seychelles

Government Role

Victoria, Mahé, capital of SeychellesCourtesy Brian Kensley

Under the socialist policies of President René, the
government has taken a leading role in developing the
national
economy. Beginning in 1978, the Ministry of Planning and
Development has drawn up very detailed "rolling" five-year
development plans, which are updated and extended every
year. The
Ministry of Finance is responsible for economic decisions
and
budgetary policy. A separate Monetary Authority supervises
the
banking system and manages the money supply. Although
foreign
banks operate branches in Seychelles, the government owns
the two
local banks--the Development Bank of Seychelles, which
mobilizes
resources to fund development programs, and the Seychelles
Savings Bank, a bank for savings and current accounts.

The expansion of parastatal companies since 1979, when
the
first such institution was created, has had primary
economic
significance. By 1988 the number of parastatals had
reached
thirty-five, but in 1994 there were indications that the
government's more liberal economic policy would probably
reduce
the role and number of parastatals. Among the most
important
organizations of the public sector is the Seychelles
National
Investment Corporation, whose role is to promote economic
development in areas neglected by private enterprise or to
become
a major stockholder in private companies that encounter
economic
difficulties. The most powerful of the state enterprises
is the
Seychelles Marketing Board (SMB), which is the sole
importer of
key commodities, exercises controls over other imports,
and
regulates prices, production, and distribution of most
goods and
services.

The state-owned Seychelles Timber Company has
responsibility
for reforestation and for operating the government sawmill
at
Grande Anse. The fishing Development Company controls
industrial
tuna fishing and the tuna cannery operated as a joint
venture
with France. Air Seychelles, a parastatal, flies both
international and interisland routes, making a critical
contribution to the tourist routes, making a critical
contribution to the tourist industry. The Islands
Development
Company (IDC) was established in 1980 to develop
agriculture,
tourism, and guano production on ten of the outlying
islands--
guano deposits have since been depleted. A hotel complex
on le
Desroches is among the projects conducted by the IDC.
Opened in
1988, the Desroches resort is managed by another
parastatal,
Islands Resorts. A US$12 million shrimp farming project on
Coetivy Island remained in the final development stage in
1992.
The high initial investment and heavy transport costs
raised
doubts about its viability, although a study has indicated
that
about 8 tons of shrimp could be caught annually in the
area.

Despite the government's strong involvement in the
economy,
it has never imposed a policy of forced nationalization.
Rather,
the government encourages foreign investment, preferably
as joint
ventures. Concurrently with the political liberalization
in 1992,
the government has attempted to strengthen the private
sector,
announcing measures to attract investment and planning to
divest
some state-owned companies. Among companies scheduled for
privatization are the agro-industrial division of the SMB
and
Stationery, Printing, and Computer Equipment, to be sold
as three
separate enterprises. A parastatal holding 65 percent of
Seychelles hotel assets reportedly is ready to sell some
hotels
or to privatize their management. Private investors
nevertheless
remain cautious because of the continued high level of
state
economic control.